EUR/USD: Technical outlook and review.

Weekly Timeframe: Last week has likely been fantastic if you were selling the Euro and no doubt quite painful if you were buying. The EUR/USD pair dropped a whopping 349 pips, and saw the market close (1.22286) just below a weekly Quasimodo support area seen at 1.22403-1.22942. Assuming that this move took out the majority of sellers here, we could potentially see further selling down to a partially consumed weekly demand area coming in at 1.18754-1.20958 sometime this week.

Daily Timeframe: The daily timeframe on the other hand shows that just below the aforementioned weekly Quasimodo support area , price actually closed a few pips inside a fresh daily demand area seen at 1.21326-1.22234, where active buyers could indeed be waiting. It will be interesting to see what the 4hr timeframe shows.

4hr Timeframe: The 4hr timeframe shows some very interesting price action. Let’s just quickly recap before we look into this so that we’re all on the same page here. The weekly timeframe showed that the market closed below a weekly Quasimodo support area , while the daily timeframe revealed that price closed around the upper limit of a fresh daily demand area (see above for levels). Does anyone smell a fakeout here? We certainly do!

We can see from looking at the 4hr timeframe, price closed just above a 4hr Quasimodo support level at 1.22168 (located just within the aforementioned daily demand area). In addition to this, we see extra support coming in from not only a downtrend channel line (limits can be found at: 1.27696-29/10/14 – 1.24378-02/11/14), but also from the psychological number lurking just below at 1.22. Price action looks too good to not begin looking for buys.

Therefore, given the points made above, we intend to be watching for lower-timeframe confirmation between 1.22168/1.22 (green area) this week. First target for us will be around the 4hr supply area seen directly above at 1.23010-1.22734.

Current buy/sell levels:

• Buy orders: Will watch for lower-timeframe buy entries between 1.22168/1.22 (Predicative stop-loss orders seen at: dependent on where one confirms the level).